The big shed

For months this pathetic but prescient (and well-muscled) blog has told you Van was pooched. The market was obviously rolling over many months before the NDP decided to ride down into the valley and shoot the wounded. Market-killing taxes, measures to repel non-local investment, a wealth grab in the name of a speculation tax and higher property taxes all came at the same time Van was insanely taxing ‘empty’ houses, interest rates were rising and the mortgage stress test was arriving.

Real estate values in the LM would have corrected this year on their own. Now, thanks to Comrade Premier Horgan, we’re looking at a collapse. Ironically, it will help no one buy a house. What a fail.

This week the realtors gave their version of reality. It was a watered-down, tepid and carefully-crafted one. Overall sales fell 27% from last year, and are a fifth under the 10-year average. Meanwhile new listings surged almost 31% in a single month and total listings sit 17% above year-ago levels. Only 14% of detached houses sold, while 46% of condos found buyers. “The mortgage requirements that the federal government implemented this year have, among other factors, diminished home buyers’ purchasing power,” said the board, “and they’re being felt on the buyer side today.”

But B20 is not the only reason this once-impenetrable, FOMO-laced, delusional market is shedding. There’s so much more at stake, even as the provincial government contemplates more changes, like outlawing pre-sale condo flips, a higher foreign-buyers tax, an extra ‘luxury’ tax, ending the free-downpayment program and fatter land transfer levies.

So the official version – plunging sales and bloating listings – is bad enough. Now some other facts.

Detached home sales are crashing hard. What everyone wanted two years ago sits idle and unloved. Transactions are down by a third to the lowest level ever for an April.

In West Van sales are off by half. Incredible. Only 30-odd deals. Another spring record. Sales in Richmond have been sliced almost 60%.

Over six thousand listings materialized across the province in a single day. The meme is spreading. This ship’s going down.

Overall, sales are reduced an astonishing 62% from 2016. The lowest number in 30 years.

The average sale price has declined 6% from last year, 8% from 2017 – and this is just the start.

Two Aprils ago $3.5 billion was spent on housing in Vancouver. This April that fell to $1.35 billion. That’s $2 billion less spent in a single month. If you think there will not be economic implications, you’re wrong.

On the Westside prices have fallen 17% from 2016 and 11% this year while sales volumes have evaporated 80%. There is three years’ worth of inventory for houses valued at $3 million or more – the ones the NDP has targeted for a special punitive tax.

Over 90% of the houses now selling are going for less than asking. Two years ago, almost all were over ask. In April there were as many price reductions on detached houses as there were sales. Yes, it’s sinking in, that Van is sinking.

Here’s how our deep, secret, industry insider source puts it:

“No one truly knows the magnitude of effects of shifts in government policy, interest rate changes, tax rule changes and enforcement efforts. However, one thing is becoming increasingly evident in Vancouver: the Fear of Missing Out is loudly muted. For as impactful as interest rate increases and tax increases are on one’s ability to borrow and pay down debt, the psychological effects of future expectations are having a very real impact on the average person’s buying and selling behaviours. FOMO is no longer the driving force it once was. The motivation to chase a detached house price beyond the asking price is largely dead. This is the new reality of a depressed, sagging and in some cases, bursting housing market.”

Buying in Vancouver or the LM in this environment could be financial suicide. While the central bank is reluctant to raise rates too fast with $2.1 trillion in outstanding household debt, increases are inevitable. The US Fed will continue to tighten, inflation will tick higher and the dollar will be under pressure. The Bank of Canada wants to normalize rates, and that process will ultimately take place. Given this, the Dippers running BC and the cascading market, newbie buyers stand a good chance of being crushed in the years ahead.

If rates rose 2%, a BMO report this week pointed out, a family in Ottawa now needing 16% of its gross income to service a mortgage and would have to increase that to 20%. But in Toronto or Vancouver where mortgages already eat at least half family income, a 2% rate jump would see debt charges consuming about two-thirds of their earnings. And, of course, they couldn’t pass the stress test. Or buy food.

Well, this is what an unravelling looks like. But it will not make houses easier to buy. All these taxes and government actions have increased the cost of cheaper homes while knocking down the value of unaffordable ones. They’ve punted many entry-level purchasers completely out of the market. And the significant declines now being seen in Vancouver have erased buyer confidence. People want things that go up. They’re motivated by FOMO. They flee when sales fall. Plus the economic mess politicians are now creating will most greatly impact those with the least. You’d think socialists would know that. Or care.

Clearly this statement is a prediction: that Victoria’s housing market will not see lower prices in the future.

What else should we expect from realtors? (We’ll be referring back to this prediction as we have done with their other FOMO predictions in the past).

THE LOCAL BOARD WAS COMPLETELY WRONG ABOUT DEMAND IN 2017

Remember the FOMO prediction they published at the beginning of 2017 (January 2017 stats package)

“Demand Likely To Continue In 2017”

(If you take a look at it now, you’ll noticed it has been changed to something much more professional and responsible and far less realtor-like and irresponsible).

And how did that prediction turn out?

Detached sales 2016 vs. 2017:

2016: 5256
2017: 4069 . . . ( – 23%)

WHY DID VICTORIA’S R/E BOARD GO BACK AND CHANGE THEIR JANUARY 2017 RELEASE?

It likely has something to do credibility damage control. Is this clear evidence that they read Garth’s blog (and perhaps my comments)?

By publishing their latest FOMO prediction it appears they haven’t learned from their past boo-boos. The question here is when will they go back and change April 2018’s release as well?

FALLING SALES SIGNAL LOWER PRICES AHEAD

Make no mistake, 200 years worth of world housing bubble history proves without a doubt that every housing boom is followed by an equally-powerful bust.

And history has shown that housing markets always send out an (often ignored) warning signal that prices will be falling soon. That signal: falling sales.

History has also shown that it isn’t uncommon at the peak to see unusually low inventory temporarily keep house prices from falling. (Key word there: temporarily).

The world has no example of a housing bubble experience anywhere at any time where the boom wasn’t followed by a brutally destructive bust.

PREDICTABLE

The following is typical of the housing bubble experience:

* Sales fall as prices peak.
* Realtors guarantee that prices won’t fall.
* Those who predict a major price correction/crash are discounted as “extreme” and labelled “doom-and-gloomers” by realtors and anybody with a mortgage.
* Prices fall much deeper than almost anybody could have imagined.
* Those who had predicted a major price correction/crash are proven correct.
* History adds another housing bubble experience to its “bust” list.

I’m not personally convinced the BoC really needs to go anywhere, and certainly not up in rates. The collapsing RE-fed economy will easily remove 10-15% from GDP, and what’s really waiting in the wings? Nothing much really. They can pretend all they want that they’re going to ‘normalize’, but the ex-RE/FIRE economy in Canada isn’t exactly very vibrant and desperately needs the stimulus.

Will bank shareholders and those in inversely correlated sectors of the Canadian economy, few and far between as they are relative to the 70% of Canadians that own portfolios severely overweighted to residential RE and GICs that fund the whole mess, suddenly going to start spending big going forward? Doubtful. Savers, almost by definition, are not the biggest spenders. And in deflation, generally cannot be relied upon to make up for severe loss of aggregate demand.

Even if the Bank of Canada were to drop rates next meeting in response to the likely deflationary GDP-sapping apocalypse that is coming around the corner, the lead times on new investment could be considerable. Almost every day in the West we see how difficult it is to build a pipeline along an existing route, with all the required legal permits in place. Can you imagine the sort of wrangling that would be required for greenfield investment? And in any event, most investments of significance require significant front-loaded engineering which doesn’t happen overnight. So the next few years could very well be quite deflationary, lean and mean even in the brightest of possible scenarios.

Bank of Canada Governor Stephen Poloz sounded the alarm on ballooning Canadian consumer debt this week. In a speech in Yellowknife on Tuesday he said he is keeping a particularly close eye on the eight percent of Canadian households that owe 350 per cent or more of their gross annual income.

“Who are those eight per cent? If they are your next door neighbour you would be pretty worried,” said Rosenberg.

Poloz has said the Bank of Canada will likely keep rates low for the foreseeable future, but there is little the bank can do to control the importation of higher interest rates from the United States, Rosenberg said.

In the last week, three of Canada’s Big Five banks have raised mortgage rates, despite the Bank of Canada standing pat on interest rates last month and some softness in once-hot housing markets like Toronto and Vancouver.

“The Bank of Canada is just the little boy with a finger in the dike basically,” he said. “Interest rates are gravitating higher in Canada because it’s happening in the United States. There is nothing the Bank of Canada can do about that.”

Well, I gave up a lunch hour to digest the REBGV statistics report, with the hope of providing some analysis, but Garth beat me to the punch.

And what a punch it was – a gut punch. This one in particular says it all:

•Two Aprils ago $3.5 billion was spent on housing in Vancouver. This April that fell to $1.35 billion. That’s $2 billion less spent in a single month. If you think there will not be economic implications, you’re wrong.

The only other points I’d make are:
– If you have property to sell in Maple Ridge, PoCo, Port Moody or New Westminster now’s the time to get top dollar.
– Sales to listings are crashing in West Van (only 1 in 6 listed houses sell), Burnaby, Richmond, Van East and Van West (less than 1 in 4 sell), North Van (1 in 3 sell). Sales prices in these areas are falling month to month as sellers compete with each other for fewer and fewer buyers.

None of this references astronomical data utilizing the latest techniques developed by a renowned realtor, physicist, and billionaire Ross Clerk. Ross Clerk prophesized, in 2013, house prices across the country would peak.

I remember this well, my parents were (and still are) avid Ross Clerk followers, and on my 13th birthday, they informed me we were cashing out and moving into a smaller apartment temporarily as per Ross Clerk’s observations on the housing market.

My parents listed and sold our prized Brampton house for $450,000. I remember packing my toys like it was yesterday. I took a significant length of time to carefully pack my prized Barbie collection, ensuring a cleaned them thoroughly and documented them including individual photos just in case they were lost or stolen during the transition to our new apartment.

After several months in our apartment, finding I was unable to make new friends in the new neighbourhood, I decided to begin developing my superpowers. I had a few powers I was working on, however, my best power is the ability to come to conclusions based on almost no information. It is incredible. I share my superpower will all of you daily. I hope you appreciate it. I could be doing so much else with my time instead of like cleaning my room and doing my homework.

I’m working on another superpower. I think this one will be phenomenal. I will let you know what it is once I’m powerful enough to demo. I think you will all really like it.

#7 Victoria Real Estate Update on 05.02.18 at 4:52 pm
…it doesn’t change the fact that their prediction was off by a huge margin.
___________
Actually their predictions look like the Amazing Kreskin compared to the dreams you’ve been posting here for the past few years.

Interesting post about Vancouver. I agree that the market should be reeling here with all of the body blows being dealt to it. I believe it’s happening but there sure isn’t any obvious signs of it anywhere that I can see, nor are there many people talking about it on the street or in the media. (unless I’ve missed it).
I live in east Van, and in my general area I’ve seen about maybe 10 houses come up for sale in the last month and sold within a week. For the ones I have inquired about the prices are solid.
Oh well I’m sure a correction will come soon. If the market here doesn’t correct after the beating being laid on it now I’m now sure it never will.

Markets did not create this bubble. Man-made central banks that peddled artifically low interest rates in order to spur economic growth did this damage all by themselves. The central bank’s federal government master’s (non-arm’s length) cheered them on at every economic twist and turn for almost two decades.

Surprise, surprise, when you distort markets, creating one asset bubble after another there is will be real consequences for real people.

This current round of government intervention is just the “Yang” to our beloved BoC’s “Yin”. Yesterday’s central bank interest rate policies and today’s government interventions are perfectly matching book ends that attemptto solve one problem, only to create another.

“The Bank of Canada is just the little boy with a finger in the dike basically,” he said. “Interest rates are gravitating higher in Canada because it’s happening in the United States. There is nothing the Bank of Canada can do about that.”

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Bang on.

“The Bank of Canada is just the little boy with a finger in the dike basically

Lil Putz with his idiotic statements proved that long time ago.

Useless puppet.

Combine that with the incompetence at CHMC and the ‘rock star’ finance minister and you get the recipe for the disaster that we are now inevitably facing,

Curious you YVR (or LM) homeowners, are you planning to cash out now and move elsewhere or rent? The trend isn’t as great as I would have imagined. I live on the Sunshine Coast–cashed out of YVR a few years ago–and yes, people are coming over here, but not in the way I would have imagined.

If you think things are bad now just wait for next year. New home sales are down 80% condo sales are down 50% and 7% of the gta economy is based on residential construction not to mention all the people who work in renovations. Plus the spin off of people buying new furniture and what not. I don’t know how many local economies can sustain a drop like that when it is so reliant on these jobs. Best places to vultch next year will be areas that have pickup trucks and work vans parked in the drive ways

The US experience was only one of many examples of housing busts to have played out in the past 200 years. It showed us many things that are typical about the inevitable unwinding of a housing bubble.

One of the things it showed us about housing bubbles was that those cities with the highest levels of speculation always experience the biggest price busts.

Below are the price correction/crash results from the US experience:

Cities with high (Victoria-like) levels of speculation:

San Francisco: – 45%
Los Angeles: – 41%
San Diego: – 42%

Cities with lower levels of speculation:

Dallas: – 11%
Boston: – 18%
Denver: – 12%

As always, I don’t predict how deep the actual price correction will be. I give no numbers. But you can be sure that Victoria’s experience will not be a soft landing, despite what realtors may predict.

The (previously) more famous Greshem’s law states that “bad money drives out good”. Back in the day everyone would hoard high quality 100% silver coins if, for example, a bunch of debased half silver, half copper coins showed up in circulation.

My new Garthem’s law states that bad posters drive out good ones.

Yesterday Stan Brooks responded indicating that I was confused and stupid. This is not much of an honor as I believe Stan is a newbie here who showed up a few months ago with tons of insults to many others. A number of other regulars here are quick to insult as well. Livin Large comes to mind though he has toned it down lately and/or is less active.

There is no shortage of people posting here. But I am pretty sure that this blog has lost some good regulars due to the insulting behavior of the bad regulars. Hence Garthem’s Law.

I now wait to see if there will be enough insults to drive me off on another hiatus from posting. Garth get’s first crack.

The big picture reveals that it’s (pretty much) peak house price in Victoria.

Housing bubble history shows us that realtors react to dismal sales at or near the peak by turning the propaganda dial to the max.

Do they really believe their own propaganda – that dramatic drops in demand won’t bring about lower prices? Or that it really is different in their market and that prices can continue to rise even with dramatically lower demand?

Realtors want you to think that nothing can stop the price appreciation in their market. All of their explanations have been proven false by 200 years of housing bubble history. Below are some examples of their faulty logic:

* If prices were going to fall it would have happened already.
* Those who predicted falling prices in the past were wrong, therefore they will always be wrong. Buy now!
* Anybody who doesn’t agree that prices will keep rising is jealous because they don’t own.
* That prices have kept rising the last month or two or three even though sales have fallen proves that our market is impenetrable. Those who say falling sales bring falling prices are wrong. It’s different here. Buy now!
* Everybody wants to live here. Therefore prices will keep rising year after year.

“As told many times here, south Vancouver Island – which includes Victoria and all the surrounding communities – is on fire! ”

Who do you think your actually convincing. Sales are 25% down from 2 years ago, inventory is at its highest levels in 2 years, bidding wars are way down, price cuts have increased. Condos here have taken a big hit in sales as well. Prices up a bit means nothing. So few homes sell in Victoria that just a few multi million dollar sales skew the average. The Capital has had maybe 3 weeks of average sales and you consider that a success? I wonder what you real estate firm will be writing in a couple of months after the spring market is done and reality kicks in

I wish I could remember the exact details of an article about 1 1/2 years ago. Using a metric which I forget Vancouver had the highest real estate prices not only in the world but in the history of the world. Living in Vancouver, seeing the insanity and how totally dependant our economy is on residential real estate I fear once this collapse gains momentum there will be nothing to stop it. People forget that in the late 90’s B.C.was a have not province and we were receiving equalization/provincial welfare from Ottawa. Then the real estate boom hit and has totally masked how sick our underlying economy really is. When you look at the historical RE bubble we have created I personally think that prices will drop by at least 70%. Doesn’t logic dictate that the largest real estate bubble in the history of the world should create its largest collapse.

I thought that being a MGTOW was for home ownership because we can rent it out to single ladies, profit & pay property taxes to the government that despises us, while footing the bill for tenants. I’m confused like my gender.

Wow. That’s fascinating. That will be big like the Panama Papers for sure.

Did you guys see what happened there politically? Backbench Tories revolted against the PM on that issue so she had to change her tune. That’s a legislature working properly. Here you have the PMO dictatorship telling everyone what’s what.

Well, Well, Well, I cant believe this price drop.
One of the best views and area in my to live
on the Westside of Vancouver. Started in the $3 mil
plus a year or so. A number of price reductions.
Finally sold for $2.2 look up 8428 Gillnet! I could give
you a few more but I like reading about it isnt
happening in Vancouver

Assuming 20% down so 1.088 Mortgage = ~4600-5000 a month payment so let’s say 4800
Let’s say it was rented for 2500 a month so 2300 * 24 months the difference from the mortgage payment is (4800*24 – 2500*24) = 55,200 holding costs for 2 years

So total cost $67,200.00 +55,200 = $122,400.00

Therefore 1,360,000 + $122,400.00 = 1,482,400 with the new sale at 1,500,000 for a difference of $17,600.00

They made $17,600.00 in 2 years by my rough estimate – though that rental income got added on to their taxable income.

If it wasn’t rented their holding costs was 188,000 and they lost 42,400

Either way you slice it I think they’re happy they found a greater fool… nice sized lot though.

If they put that 20% down payment in a balanced portfolio that returned 6 percent a year..they’d have 33.6k in income for those 2 years (assuming they leave it for the long hall) – likely tax advantaged. Garth has the right of it…

Anyone please poke holes in my math… I could have it all wrong :)

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Hey Wave,we calling this one Green Snow?

I’m cool with that,they didn’t got ask but one of the few ones lately that got well over assessment.

Had a lot of cases go off the market in the last day or two, will have to wait to see if they come back on with a new price like the one at Lorraine or if I have some more sales to report.

Sold at just below assessed value. It is not uncommon for asking prices to bear no relationship to the market in real estate. If people need to sell, they will get the prevailing market priced. Overpriced product does not sell, unless the seller gets very very lucky. Thirty five percent over assessed value, dreaming in technicolour.

Trump tax reform attacks Canadians with Canadian businesses in Canada. When is the Canadian government going to stand up for Canadians living in Canada who had the misfortune of being born in the USA? This is not about rich people getting a break, this is about theft from the Canadian economy and Canadians, pure and simple. The couple portrayed in one of the CBC articles linked to below may be well off comparatively speaking, but as usual, the ‘burn the witches’ mindset is well entrenched in the average Canadian brain. So sad. Who will they come for next?

It cracks me up how people think they or anyone else can predict the future. Does anyone know what buyers are going to do? Sellers? Governments? The stock markets? Nope, nope nope and, yeah, nope.

This is a great entertaining blog from a wonderful writer and personality, and I appreciate that you publish this Garth (and can’t believe you don’t monetize it but whatevs) but the drama…oh the drama.

Realtors who post on Garth’s site always deny that they are realtors, but what they choose to say, their flawed logic and propaganda gives away what they do for a living.

And none of them have been able to prove that they aren’t realtors.

So the latest attempt at fear mongering from Island realtors is that it’s different here on the Island and B20, rising rates, etc. won’t affect prices, so buy now or be priced out forever.

And they point to the price gains shown by their realtor Frankenumber index since the beginning of the year as proof that if B20 and rising rates were going to have an effect on prices it would have happened already, it hasn’t happened, so it never will. Buy now!

Demand for detached homes in Victoria in April was lower than in 2017, 2016 and 2015, and similar to 2014’s level. In fact, sales in April were significantly lower than in 2007 (which was an average year for sales of detached homes in Victoria using a fair comparison). This indicates that outside buyers are not keeping demand as high as it was in recent years which tells us that outside demand will not save Victoria’s housing market from its inevitable bust.

Housing bubble history shows that when it comes to housing bubbles it’s always different… until it isn’t.

“I’ve been homeless for a few weeks now.”
“The mentally ill and addicts are your primary occupants.”
“the sad thing is I’m homeless and I’m starting to agree with a lot of people who say that homeless people are lazy, addicts, a$$holes, etc because I’m now seeing this firsthand in the shelter system”

“I am pretty sure that this blog has lost some good regulars due to the insulting behavior of the bad regulars.”
————————————-
“There is better way.”
————————————-
The best way is, to avoid lying on public blog where history is fully documented, as it tends to hurt ones credibility.

Looks like the standoff between buyer/sellers is starting to move and, to the surprise of nobody, it’s breaking for buyers. Each new sale at a lower price sets the comp for the next sale so once this sucker starts to tip it gets hard to stem the bleeding. Time to grab the popcorn and enjoy the fireworks!

Well when Comrade decides he is actually part of Canada; ha, not going to happen, the West Coast nuts are just delusional, hope gas goes to $3 a liter, so be it, you made your cake now eat it!

Never mind prices of banana’s; gas hikes, (Comrade is loving this) good, I hope it bites him; went to two different grocery stores today, could not beleive on how much prices rose in one week and could not beleive on how empty the stores were, no troubles at the cashier, no line ups whatsoever, get ready for the great cauliflower price war, lettuce and tomatoes are insane; good thing it is now growing season.

It pains my brain to try and figure how these politicians can think they can add so many different layers of taxes on something that people need to live in without creating a total disaster. Sure, you can rent instead but somebody has to own the house and they have to pay all these crazy fees. There should only be one tax on real estate: Property tax. And it should be the same rate for everybody.

I think what happened in BC is the government took a look at things and said “Hey, look at all the equity people have in their homes from this crazy real estate market! This is an unfair windfall! We must find a way to take it away!” Well, it looks like that is exactly what is going to happen but as always not in the way the government hoped. They can’t get anything right. You’d think by now we’d have learned that.

Anyway, I think if you have some money and haven’t already followed Garth’s advice I’d say now is the time, move as much of your portfolio to the US and Europe as your portfolio allocations allow. It seems like every government in Canada save maybe Saskatchewan is hell bent on demolishing the Canadian economy. Sure maybe the lefties don’t shed a tear when a cement plant in Kamloops closes down and sends 37 people to the unemployment lines, as well as the knock on effects it has on the rest of the community as businesses that supplied the cement factory or transported the cement also shed workers, but it is symbolic of what’s to come. Between all the crazy taxes (including the dreadful carbon tax) and business restrictions like banning pipelines the economy in the west is screwed. It has nowhere to go but down. Sure, this particular plant isn’t closing just because of the carbon tax (although that is a factor, yes, it takes a lot of fossil fuels to make cement! Who knew! Well, you should have.) Part of it is also that one of their major markets was the oil and gas industry which has also had the knees knocked out from under it. (Yes, oil and gas wells use a lot of cement. Steel too. When you shut down one industry you affect a whole lot of others. If you don’t know these things you shouldn’t comment on oil pipelines.)

Just recently gasoline prices have gone ballistic in Vancouver because of a pipeline shutdown and refinery maintenance in Washington state. Why would this be? Well, it’s because what fuel Vancouver uses that doesn’t come through the hated Trans Mountain pipeline comes from the US. Why are we importing fuel from the US while banning inter-provincial projects? But this is the logic of the left. Somehow US energy imports are “greener” than those from Alberta. It is completely illogical. The left and the greens have toothpaste for brains. Toothpaste imported from the US that is. Can’t make it here because there are carbon taxes involved in that too.

I saw one of these pipeline protesters being interviewed and he said he doesn’t use any carbon because he takes the bus. What a complete buffoon. But this is the level of thought that is currently driving Canadian politics. I remind you again that 50% of the population is below average intelligence, and some of them stunningly so such that the army won’t even take them, but they all get to vote and I think they likely make up the bulk of the protesters.

See, lefty toothpaste brained greenies, here’s the thing: Socialism only works if you have a robust private sector export driven economy to tax and strict controls on immigration that are focused on the economic needs of the country, not some moral ideology. Think Norway. Socialism works in Norway because the economy is in fact very capitalist, but it provides a robust tax base, they export a lot of oil, and immigration is tightly controlled so that they do not overwhelm the social security structure. The lefty toothpaste brained greenies often hold Norway up as an example of what we should be trying to achieve. I say “I agree”. They don’t have pipeline protest in Norway. If Statoil wants to drill in the North Sea, they drill in the North Sea. Also if you want to immigrate, you’d better have a job waiting and a useful skill set to match your age.

acdel on 05.02.18 at 7:22 pm
Well when Comrade decides he is actually part of Canada; ha, not going to happen, the West Coast nuts are just delusional, hope gas goes to $3 a liter, so be it, you made your cake now eat it!

____________________________________
____________________________________
you talking about the most useless silver spoon idiot mr ponzi who refuses to raise interest rates to protect the useless member of society? debtors? Are you talking about socialist CMHC?

The small change in rates and tightening on mortgage products has cut my purchasing power (excluding the sale of a home to basically finance myself) by 620K in the last 1.5 years. This is not a misprint and based on a steady income that has not changed in that time. I constantly carry pre-approvals at a BC credit union – provincially regulated. Almost a sub-prime offering.

The soon to be adopted B20 in the next several months by Coast Capital Savings (a popular credit union in the Lower Mainland) will cut my own personal borrowing amount by another 120k.

Without having already having a home as collateral, a decent income will not afford you anything good anywhere in BC, so new working class entrants are screwed, which is why they are not showing up anymore.

Money laundering used to pick up the slack on these high priced properties in BC and push prices higher, but now there is an Eby problem that is about to get worse.

D.Eby is just getting started.

When understanding the above and outside of a few people trading houses and moving around, is it any surprise the market is not finished?

All of the key financial streams that was pumping BC real estate has been choked off. And now the housing market is passing out.

#38 Randy on 05.02.18 at 6:15 pm
“As told many times here, south Vancouver Island – which includes Victoria and all the surrounding communities – is on fire! ”

Who do you think your actually convincing. Sales are 25% down from 2 years ago, inventory is at its highest levels in 2 years, bidding wars are way down, price cuts have increased. Condos here have taken a big hit in sales as well. Prices up a bit means nothing. So few homes sell in Victoria that just a few multi million dollar sales skew the average. The Capital has had maybe 3 weeks of average sales and you consider that a success? I wonder what you real estate firm will be writing in a couple of months after the spring market is done and reality kicks in

————

Again Jerry, its South Island – which includes Victoria, the Capital and communities north over the Malahat. Not just Victoria…

What will realtor firms be saying in a few months?

It will be a repeat of what has been said for the past decade as there is no material reduction in prices – nor will there be.

It will be something like this – ‘Despite a below average month for sales, and the implementation of credit reducing measures like B20, we continue to see price appreciation at all segments of the market. Most markets suffer from limited inventory and unmet demand from both local and out of town buyers. Stable job growth and nominal wage growth continue to counteract the glacier rise in interest rates, and will continue to do so in the foreseable future. Housing continues to outperform the stock market as it has for the past decade, and British Columbians feel confident in the investment they have made on housing.’

Its easy to write that drivel…

VIREU has been using the same tired – ‘falling sales and rising prices are the sign of a correction just around the corner.’ But we have seen below average sales and rising prices for two (2) and now coming up to three (3) years. And she has said the same thing for the same amount of time.

The Kelowna market and all other secondary markets are being immediately impacted and have been now for well over a year as Vancouver slows down.

Prices try to push higher outside of Vancouver but the softening on prices going into a Spring market in places like Kelowna tells the story.

You now see “reduced below BC assessed value” on listings in Kelowna, SFDs are price cutting if needing to move it and for the first time in a long time condos are price cutting (again, you have to search to find these), but this is a huge sign if you ask me going into a Spring market.

The condo price cuts surprised me, but it looks like all segments are now cooked and there is not much of an appetite for any housing product.

Craziest stat of all: the new BC measures have not fully kicked in until later in the year.

Just getting started on this new downward direction.

The herd might freak out with their BC Assessment letters this January if this downward trend continues into July, which I expect it to do.

Depending on how much the stall accelerates, BC Assessment might pull another magic trick 2009 style tax freeze on assessed values that at that time allowed them to patch over a massive drop in BC real estate values to not freak out the herd here in BC and keep values frozen from the year before – keep that tax base up – although you can be sure the Liberals would be the only corrupt party to support such an idea and as we know the Liberals are no longer in power in BC.

I thought I would leave the Pink Snow alone for a minute and just show you a comparison between a couple of houses that appear side by side on Zolo at the moment.

I don’t live far from the one on Sherbrooke and the one on 22nd is one of my cases that just come back on the market,the did not lower the price because they can’t.

I guess to make any sense of this post you need to spend 30 seconds to look at the two links

These guys picked this house up in 2003 and have in on the market for less than assessment and have a far superior product than the second one for a cheaper price, with the option to lower if needed to get the deal done.

These guys have Donald Trump would describe as a shithole and they are in tough.

Inferior product than their competitors and because they paid 1.33 in October 2017 they have no wiggle room and will extremely lucky not to lose money despite being on the second rung of the Vancouver detached ladder.

I don’t want anyone on here to buy the one on Sherbrooke ,as I want to hold onto the title of the biggest idiot in the neighbourhood…

Money laundering, crime, payments under the table, corrupt government and banks in the shadowy environment that goes sideways is not so predictable.

I would not be betting against AG Eby.

AG Eby making lots of enemies in the BC RE community right now means he is doing his job, something BCers have not seen in 15 years.

A dramatic slow down in corruption and money laundering is the biggest problem right now for BC Real Estate and it will cripple it.

Do you really think casinos that were used for laundering money in BC currently top the list for criminals after putting all of this stuff in the spotlight, just like housing now coming under the microscope?

Criminals will look at the housing crash as an accident as they move on to other mediums of legitimizing drug cash through different schemes, maybe this includes another country.

Pipeline woes aren’t the only thing making Canada a bad place to do business these days ;)

Anyone paying attention to the hacked WeChat conversations constantly being leaked online regarding Vancouver will understand the current consumer sentiment surrounding housing in Vancouver and the Lower Mainland.

The largest concentration of financially illiterate morons can be found in Langley, BC.

You can literally take a drive through Langley and witness millennial snowflakes humping the outside walls of new condo builds before passing out and re-awaking to find some more open condo building wall to start humping again.

Today cra decided to take back ccb from us because they are unsure of our marital status… ok i understand that, better safe than sorry. I know how married people can prove their marriage, but that got me wondering comonin law prove common in law, where do they their proving papers…

Wifey & I are sitting on our fully paid up property. We were thinking of moving up but not anymore. The Canadian Real Estate market environment is a complete mess. With all the legislative changes, hazards, taxes and hassles involved with moving again …………. we decided not to bother. Staying put is the best strategy.

So when do you expect prices to drop in bc? As of today everything is at an all time high including detached….have not seen any price declines. Inventory is low and everyone I know still craves realestate. I hope your right sooner than later.

Had coffee with a friend today who is currently residing in BC. During conversation the following items of note were mentioned: 1) the ‘foreign buyers’ tax that targets Canadians who do not reside in BC has resulted in all non-BC potential buyers pulling out of deals for one resort; another developer has been told by their bank that the bank will not provide financing for their project until they see just how this tax affects the market. 2) my friend is looking to upsize; when my friend & partner were looking at a property listed for 2 million the agent (such a pro) not only commented on how ‘it must be nice to be able to put down 2 million’ but actually asked friend & partner to explain how they had such an amount to spend. Needless to say, that ‘Realtor’ did not get their business. 3) ‘high end’ properties owned by non-BC residents are flooding the market in those areas where the non-resident tax applies. However, despite the hopes of those who are expecting a windfall of housing to become available, those current owners are still listing their properties for mega-bucks. So much for housing becoming ‘affordable’.

So, what happened to all the B20 will not stop the YVR RE Juggernaut Commenters?

“Two Aprils ago $3.5 billion was spent on housing in Vancouver. This April that fell to $1.35 billion. That’s $2 billion less spent in a single month. If you think there will not be economic implications, you’re wrong.”

No dung Sherlock. 60% of the cash gone y/y.

That’s devastating. Expect a lot of moth balled high rises this and next year.

In reality, the B20 effect REALLY ONLY ONE MONTH OLD as there were a lot of late 2017 “Beat B20” pre-approved buyers in 1st Qtr 2018. Their time ran out in April.

Prices sticky for the April-May peak in effect some complain.

Relax. Human nature. Word has to get around. MSM finally starting to report the truth. Sellers just testing the market now with minor price drops. Most will lose out and not sell (greed a powerful thing).

By Summer’s end, reality will set in (i.e., desperation a powerful thing).

Sept. will be the crunch month for steep price drops. Hopefully no other bad news economically than this.

If so, then the correction will turn into a crash and that will be bad for everyone as in recession.

Hi Flop – I have a little excel script now that takes the sold price, list price, property transfer tax, how long it’s listed (to calculate the cost of holding it) and its status – ‘vacant vs rent vs living in and paying down mortgage’ to calculate how the equity is looking – assuming a juicy 1.99% interest rate. Nice little tool for vulching….

#73 The Secret Code on 05.02.18 at 7:57 pm
The Kelowna market and all other secondary markets are being immediately impacted and have been now for well over a year as Vancouver slows down.

Prices try to push higher outside of Vancouver but the softening on prices going into a Spring market in places like Kelowna tells the story.

You now see “reduced below BC assessed value” on listings in Kelowna, SFDs are price cutting if needing to move it and for the first time in a long time condos are price cutting (again, you have to search to find these), but this is a huge sign if you ask me going into a Spring market.
………………………………

I just don’t see that in Kelowna. I only see prices going up, properties selling, and new builds happening everywhere. Maybe i am not looking hard enough but i just don’t see a slowdown here.

#91 Linda
Yes, I noticed lots of properties in Van West coming on the market in one day. On Saturday I counted 6 properties listed by the same agency, same agent, all asking from $3m to $6m. Rats (speculators) leaving the boat. It doesn’t mean they are going to get what they are asking for. They run our of fools and Garth’s numbers show it! Other huge thing is a hunt on condo presales, assignments, flippers triggered by Globe and Mail article by K. THOMLINSON. Developers and real estate cartel screaming as their last non transparent, often foreign funded segment of the market gets under scrutiny. NOT to mention that CRA really wants those flipping gains taxed.This is just the beginning. More to come

I just checked to see if it sold and just like the one I wrote about on 22nd ave,they did exactly the same thing.

Put it back up,same price as once before,just fresher,with a different cover pic.

Been fighting for a year now.

They could have lowered the price to attempt to attract on offer ,but at this number they are already going to take a hit despite being down the bottom of the ladder as well as a few of the other cases I have presented recently.

I should have applied to be one of the new Mythbusters.

The myth that only people at the top end of the real estate ladder are in trouble…

Kind of unsure why comments are highlighting “later newer”comers to the RE being screwed when it’s already too late? It’s called they will learn an expensive lesson. Can’t teach that in University obviously because these higher paid persons must be somewhat higher educated to afford teh “insanity prices” & it did them diddly for their financial illiteracies and insight into primal human behaviours. Just be happy you’re not them.

#94 Waiverless on 05.02.18 at 9:16 pm
#74 For those about to flop… on 05.02.18 at 8:16 pm

Hi Flop – I have a little excel script now that takes the sold price, list price, property transfer tax, how long it’s listed (to calculate the cost of holding it) and its status – ‘vacant vs rent vs living in and paying down mortgage’ to calculate how the equity is looking – assuming a juicy 1.99% interest rate. Nice little tool for vulching….

Horgan’s a leader, plain and simple. Pretty funny, if left to it’s own devices (minus b20 and local governments) this market would be heading for a complete disaster and a crash course with the stars… still.

Nice to see someone realize that homes are for families and ETF’s are for foreign investment instruments.

We’ll see how it all turns out, either way it was going in the ditch, perhaps he saved a few people from a really bad end.

Not a fan of the dippers usually, but honestly, the last government left BC in a complete mess. Nice to see leadership on this one.

“No one truly knows the magnitude of effects of shifts in government policy, interest rate changes, tax rule changes and enforcement efforts. ”

Lol no. We know exactly. Runaway speculation and a massive housing bubble caused by the fed’s decision to stimulate housing for 15+ years. Congrats, their ‘economic miracle’ will destroy the economy while enriching the finance sector with taxpayer backing.

This Dipper machinations about R/E out here in B.C. isn’t in itself that big a deal. Sure they’ll shake the weak players out. This is a political move for the populists . Like does anybody really care or even comprehend what barriers the first wealth tax in Canucklestan breaks?
Its political. So what. The shudder of fright that went through this town was the morning after Mueller raided Cohens office & violated client privilege relationship. Is this a precursor to what can happen here? This town was built on client/lawyer anonymity before the law. For you kiddies that means somebodies name is connected to title in the downtown R/E lawyers office in a trust agreement. These Dippers might be crazy brave enough to open them. Even kinda supporting such a thought gives me the shudders.

#95 FOUR FINGERS WATSON on 05.02.18 at 9:26 pm
#73 The Secret Code on 05.02.18 at 7:57 pm
The Kelowna market and all other secondary markets are being immediately impacted and have been now for well over a year as Vancouver slows down.

Prices try to push higher outside of Vancouver but the softening on prices going into a Spring market in places like Kelowna tells the story.

You now see “reduced below BC assessed value” on listings in Kelowna, SFDs are price cutting if needing to move it and for the first time in a long time condos are price cutting (again, you have to search to find these), but this is a huge sign if you ask me going into a Spring market.
………………………………

For instance a smallish condo in darkest Fernwood is on sale for 10K south of the original asking price, now $564k; after 17 DOM.

It has the “character of a 19th century home” (this heritage place is part of a three-unit condo “complex”of 886 square feet).

This neighourhood never made it to the “upper echelons” of local real estate “society”. Many homes surrounding this place are very old and tired-looking, and others are subdivided into apartments. Local streets and sidewalks need major fixing.

Today I noticed quite a few apartment rental signs, more than usual. Why? University students finished with studies; tenants forced to double-up elsewhere because of high rents, or folks just getting out of Dodge.

Just had a visit from someone working in real estate in the Bellingham area. It looks like the foreign money that was going into Vancouver is now going just across the border. houses selling before a sign goes up. More buyers than sellers. Prices rising. Hot money looking for a place to park. No Canadian buyers because of the Canadian dollar. Nothing new about this. Money goes where there is opportunity.

#96…Blood….true more or less…but real estate and equities have zero correlation. One is fungible the other not. There is nothing less liquid than real estate during a decade long crash.

Victoria comments….the “Island” is peak mouldy delusion. Listings have doubled to over 9000 in the time it takes a Taco Bell taco to bullet train it’s way through your colon. No foreign invasion….whitest community I’ve seen in Canada since I stood outside in the schoolyard and sang Oh Canada the day Kennedy was assasinated.

A minuscule number of Vancouver sellers followed a well worn trail of tears to Qualicum and Nanaimo. But like the others before them half will flee once the sun goes down and the gas tank sucking crackheads bring on the planets longest and moldiest monsoon. It’s suicide by boredom when the fish don’t bite. The illusion of Idyllic Island Life is only six weeks long and Two hundred dollars for a deer every time the old lady gets her back up from cabin fever.

The only other points I’d make are:
– If you have property to sell in Maple Ridge, PoCo, Port Moody or New Westminster now’s the time to get top dollar.
+++++++++++++++++++++++++++

I phoned the local realtor in Maple Ridge with his shingle everywhere in this town (seems he is the only realtor there) since the property at 13802 Silver shows a SOLD sign and he told me that it sold for $1,063,000. So it sold in 6 weeks for about ~$50k less than original asking and ~$15k lower than the reduced price of $1,079,000 that was set 2 weeks after first list.
So even Maple Ridge is starting to show a bit of weakness since everything around that area was selling in a week just a couple months ago and for full ask.

It’s not likely I would ever vote NDP , but I applaud them speeding up the correction. It has been far too long in arriving. Now hopefully Mr. Market will do what history has said he will do , significantly correct.

Not a fan of the dippers usually, but honestly, the last government left BC in a complete mess. Nice to see leadership on this one.
+++++++++++++++++++++++++++++++++++++++++++++++++

You should have heard the new BC Lieberal leader today, who looks like the twin of former preem Greedo Campbell, barking on local radio that the dippers are causing all sorts of chaos when it was the thieving, lying POS Leberals that sure enough created the mess that BC is in, with their aiding and abetting money laundering (hello “Rich” Coleman).
When the Liars first got voted in, Greedo proclaimed that we wouldn’t recognize BC when he was finished, then the RCMP declares that organized crime has infiltrated the ledge.
You can guess the rest, or just read the history books on BC.
Scambull was right, we don’t recognize BC since the Lieberals left it a corrupt banana republic.
It’s going to take a lot of pain to bring BC back to normalcy and drain that stinkin’ swamp that the Liebs left we BC’ers in.
I wish there was a law to hang all traitors to taxpayers.

I erred in thinking this was paradise on earth but it is just a debt slave hell hole.

Lower Mainland rains 8 months of the year and even though it is warmer than other parts of this uninhabitable country it is most depressing.

The corrupt have made even this little corner of the country a sick and twisted financial black hole for our young.

It is looking more and more like we are all going to leave here. Myself, the wife 7 kids and the Rellies will tag along as well.

We are going to do it right though, It may take a few years but we will find a warm, sunny place that won’t send our Grandkids to war by draft on a whim. (That rules out the USA, for those of you who are too young to remember.).

We are open to suggestions.

Kind of leaning to Europe where you can drive to 12 different countries in 4 hours.

Maybe near the Med Coast is what I am thinking. A place with 300 million buyers nearby.

Coast Capital Savings (a popular credit union in the Lower Mainland) will cut my own personal borrowing amount by another 120k.
+++++++++++++++++
You do know that Coast is trying to go federal, so it won’t be on the hook for anything over $100k when TSHTF, Do you think BC will be able to bail out Coast? Wishful thinking.
Another thing, did you get a notice that you could opt-out of the money manager that they just installed in Feb?
Well I opted out and they installed it anyway.
The company, MX Technologies, that made and installed the program is based in Lehi in Utah’s Silicon Valley, right by the NSA’s huge data collection center.
Also the company is a small player ($50 million) but is partially owned by a huge insurance conglomerate based out of Texas. Guess what they are doing with all that transaction data they’re sending to the states out of the scrutiny of Canadian privacy laws. Make sure you aren’t using a Coast Credit card for your booze, junk food, and soon to be pot purchases, because they will have that data to refuse you on any claims in the future.
Coast has sure gone downhill in the past couple years, that’s why I pulled most of my money out last month after Coast’s privacy commissioner denied my opt-out privacy breach claim.

The (previously) more famous Greshem’s law states that “bad money drives out good”. Back in the day everyone would hoard high quality 100% silver coins if, for example, a bunch of debased half silver, half copper coins showed up in circulation.

My new Garthem’s law states that bad posters drive out good ones.

Yesterday Stan Brooks responded indicating that I was confused and stupid. This is not much of an honor as I believe Stan is a newbie here who showed up a few months ago with tons of insults to many others. A number of other regulars here are quick to insult as well. Livin Large comes to mind though he has toned it down lately and/or is less active.

There is no shortage of people posting here. But I am pretty sure that this blog has lost some good regulars due to the insulting behavior of the bad regulars. Hence Garthem’s Law.

I now wait to see if there will be enough insults to drive me off on another hiatus from posting. Garth get’s first crack.

========================

You are ignorant of how money work, i.e. stating that every loan is backed by deposit.

And you sounded supremely confident in your (wrong) assumptions.

I pointed out to your weaknesses with numbers and recommended further readings.

You did none and came back whining that somebody insulted you.

So I double down on (financially) stupid.
You mix polite for good, harsh but just for bad.

Blog dogs, the cheapest form of living in this great land is a trailer home. Can’t understand why folks will indenture themselves to the banks for a lifetime when for 20k you can buy a trailer home or build one for 20k and live live a king. Here’s what I am talking about kids…

Spring has finally sprung but Toronto’s home sales remain gloomy as tougher mortgage qualifications and rising interest rates continue to push buyers out of the market.

Realtors in Canada’s biggest city had one of their worst months in the past 15 years in April, with sales down by almost one-third from a year earlier to 7,792 units, according to data released Thursday by the Toronto Real Estate Board. That’s the fewest number of sales for April since 2003. On a seasonally-adjusted basis, sales have fallen for four straight months, with the fewest transactions to start a year since the 2009 recession.

Individualism and self-reliance rocks.
Community conformity is slavery.
Except for the slave masters, they got the talking points and are grand master puppeteers. They do really well. AL Gore ring a name. Clinton foundation anyone?
Why very few see it. I’m going with the educational industrial complex. Dumbing down slaves, and the slaves pay for it dearly.
The shit people do for an obedience certificate that they proudly hang on the wall. Idiots.
Dr. Smoking Man
Ph.D. Herdonomics
……………………………………………………………………
As the mendacious a$$hole above so eloquently states “The shit people do for an obedience certificate that they proudly hang on the wall”. Idiots.
Whilst sitting behind his desk is an obedience certificate that says…….
Dr. Smoking Man
Ph.D. Herdonomics

#109 awesome!!!! on 05.02.18 at 11:11 pm
…
WHO CARES if many entry-level purchasers are completely priced out of the market.
—–

People who hope to sell their houses care. When there is no entry buyer, there is no move up buyer. Think about it and you will also see that without additional buyers there can be no net demand, as existing owners already have a house. What is more, the pool of existing owners is constantly reduced by death, so net demand is, in fact, negative without entry buyers.

That is kinda huge. Mostly because they are including condos, which have been on an upward tear since they put out the “chinese dude” Ontario copycat tax and B20.

Take away condos and you’ll have a much higher percentage decline.

Now for the point of the post.

I found this blog a few years’ back, when people in Toronto were buying houses, basically anywhere and everywhere, for whatever insane number they could bid, at blind auctions held by real estate agents in people’s kitchens. The idea was, get in at any price, because next month the house will be worth hundreds of thousands of dollars more.

This idiocy went on for a number of years, driving prices up into the stratosphere while interest rates kept getting cut. People were throwing around six figure numbers, of money they did not have, like they were bidding ten dollar bills at a community charity auction.

So throughout this little situation, I was purchasing buildings based on my code for real estate investing: Outwardly crappy building, good bones and mechanicals, bad location, that has the possibility of turning into a good location if certain definable things happen in a definable time.

In other words, I was betting. Like betting on sports teams and horses and anything else, there has to actually be a “bet”. In other words, you have to believe something will happen, that something will increase the value of your investment, and you have to bet on that.

So what happened? Well, while people continue to lose six figure amounts on bad real estate investments in the GTA, I have this year made additional high six figure amounts on some of my real estate bets. This while the Toronto market is crashing.

Why? Well how can you lose money purchasing buildings for very low six figure amounts, while everyone else is paying millions for “prime neighbourhoods” and “good schools” (load of caca, there is no such thing as a “good school”, rich people’s kids get a lot of tutoring, that is why they do better on their SATs)?

How can anyone lose money doing that? It is like taking candy from babies.

I am still riding up capital gains on properties purchased for peanuts back in 2011 and 2012, in crap ‘hoods that “gentrified”.

And this stuff is so easy to predict in the inner neighbourhoods of Toronto, because everything is so tightly packed together. I can walk from a bad neighbourhood to a good one. It takes ten minutes or less. I can predict how the “good” neighbourhood will expand based on simple land use research and a rudimentary understanding of how building permits are issued and how counsel decides who can build what where. I can predict increases to land value based on a very limited understanding of how long the OMB takes to make a decision, and what that decision will likely be.

#131
No BS, I am the only white guy in the whole area, one of the guys in my plant put me on to this place, it is his Uncles house. Sweet deal as the last two tenants destroyed the place basically. Also get the backyard with a garden all to myself.
People keep telling me to buy which I could but why would I, one Saturday overtime shift covers all my housing costs for the month.

President Trump’s lawyer, Rudy Giuliani, said late Wednesday that men like senior presidential adviser Jared Kushner are “disposable,” but it would cross the line for the special prosecutor to go after first daughter Ivanka Trump.
“Jared is a fine man, you know that,” Giuliani said on Fox News. “Men are disposable. But a fine woman like Ivanka? Come on.”
The former New York mayor appeared on Sean Hannity’s show to attack special counsel Robert Mueller’s investigation into Russian interference in the 2016 election and possible collusion between Trump’s campaign and Moscow.

Recent media reports have been questioning why Mueller has not summoned Ivanka Trump, who is also a White House senior adviser, for an interview.

Giuliani said he doubts Mueller will call Ivanka for testimony because “the whole country will turn on him” for going after the first daughter.

But his begs the question why are woman calling for equal pay and treatment in all maters as men I would ask Sarah H Sanders? I say if Hillery is crooked then she is just as bad. Perhaps worse. Ivanka should be in jail

Oh boo hoo..those poor Ontarians and Albertans who may lose money on their second home which they might spend a month or two actually using..how sad.
I dont know Garth..not sure why you have such venom towards the BC government for doing what other governments should have done years ago. You have been ranting for years about how over priced and stupis the prices are in BC..well let them collapse now.
Are we really supposed to feel sorry for people whose second homes are dropping values..seriously Garth? Are we supposed to feel sorry for people who paid ridiculous amounts of money for property in BC over thep ast 10 years..I dont think so.
If prices collapse then deservedly so and yes there will be a massive economic recession because of it but its not the NDP to blame..its years of central banks keeping interest rates far far too low allowing rampant speculation to drive prices to crazy levels..also for Jim Flaherty loosening rules in 2006 on mortgages allowing people to have longer term mortgages and so on. This bubble has to pop one way or another..stop blaming the NDP for a problem that was created years ago by foolish central bankers and previous governmnents and human stupidity.

…..Living in Vancouver, seeing the insanity and how totally dependant our economy is on residential real estate I fear once this collapse gains momentum there will be nothing to stop it. People forget that in the late 90’s B.C.was a have not province and we were receiving equalization/provincial welfare from Ottawa. Then the real estate boom hit and has totally masked how sick our underlying economy really is. When you look at the historical RE bubble we have created I personally think that prices will drop by at least 70%.

____________________________

Everyone hopes you’re wrong, but there are too many factors that say you’re right.

The household debt levels in this province, especially YVR and LM, are no doubt astronomical. There is no industry in this province that supports the income required to buy RE. What fueled the RE surge was cheap credit, which allowed alot of ‘have nots’ to buy their overpriced house/townhouse/condo. Anyone who says offshore money is to blame may have some talking points, but the lions share of the blame lies at the feet of the general populace, for being financial idiots and going into gargantuan debt just to call themselves homeowners – this group represents the majority of RE sales during the last 5-10 years.

Now that cheap credit is going going – soon to be gone, the general populace is house poor, neck deep in debt, with interest piling up, with lousy job prospects etc etc etc…. I think you’re pretty close to hitting the nail on the head. The toilet has been flushed, BC RE is starting to swirl, the BC economy is going to take a big hit. I think a 70% correction is probably a good bet.

Garth, I can’t believe you haven’t mentioned provincial conservative candidate, Doug Ford’s pathetic idea to dismantle the Green Belt in favor of creating more urban sprawl and making his developer buddies richer – a dumb idea he has already back-paddled from. I mean, I don’t think anyone moaning over Toronto house prices is going to say, “gee, I wanna live 100kms from where the good houses and jobs are” – said no moister ever. And this wouldn’t lower any prices, it would just permanently damage a natural resource and make a few people some more money. Maybe stick to your business card printing business, Dougie – a safe bet for an ex-drug dealer like yourself. Everything that comes out of this guy’s mouth is Trump 2.0 with even less to show for it.
…But I can understand why you’d want to distance yourself from such a steaming turd pile, especially when he’s a fellow conservative.

“If rates rose 2%, a BMO report this week pointed out, a family in Ottawa now needing 16% of its gross income to service a mortgage and would have to increase that to 20%”

That is why they can’t, unless they want a full blown. recession.

Over-extended households will suffer, but this is not the stuff recessions are made of. Rates will rise again in 2018 and beyond. – Garth”

____________________________________________

I dunno Garth…real estate was about a fifth of GDP in 2017. You pointed out transaction volumes that are down 60% already in the GVR YOY. It isn’t like Canada’s other major industries are on fire to compensate. Sounds to me exactly the stuff recessions are made from.

You are ignorant of how money work, i.e. stating that every loan is backed by deposit.

*********************************
Stan is right that I am very confident in my views. Academic credentials are no guarantee of being right or much intelligence. But it might be relevant to note that I am a Chartered Financial Analyst, a Certified Management Accountant and have an MBA degree. And I have been reading the financials statements of several banks each year going back over 15 years. I have been doing financial analysis and writing about banks for over fifteen years. I feel like maybe I have some valid information to share even if some people don’t believe me or question my motivations.

I will willingly admit to being arrogant at times on this blog. But I have never been anything but 100% honest and presented ideas and facts that I sincerely believe are true.

As I said, it is true that banks together with a borrower can create a deposit from thin air. The deposit is then owned by the customer not the bank. Offsetting this the customer owes a loan. At that instant the customer has in effect financed his own loan since the deposit remains with the bank (for the moment)

Read any deposit-taking bank balance sheet and you will see that loans are about equal to deposits.

Once a loan is made and a deposit created the borrower tends to spend the deposit (which he why he got the loan and the bank put it in his account as a deposit). The deposit ends up in the hands of the seller of a house or some business for example.

Deposits once created by one bank tend never to leave the banking system (little comes out as cash). But it tends to leave the specific bank who created it and that bank needs to attract and retain other deposits often created by other banks.

Blacksheep is correct that a bank does not FIRST need to attract a deposit to make a loan. Instead deposits and loans mostly get created at the same time. This does not change the mathematical fact that deposits fund loans.

Simply start by reading any deposit-taking bank balance sheet and see deposits are about equal to loans.

Consider someone and NOT the bank owns those deposits. The deposits are liabilities of the bank. Not all of the deposits are owned by individuals some are owned by corporations.

Remember so called “cash” on corporate balance sheets is not in the office safe. It exists as bank deposits and for larger corporations as treasury bills.

The 8% are indeed indebted up to their eyeballs. But others including the 1% and corporations are owed that money. Yes, banks are owned most of that money but banks fund their balance sheets almost entirely with deposit money owned by their customers. They have 5 to 15% in equity or non-deposit funding as well but usually you will see that loans are no more than 85% of assets so again deposits tend to about equal loans.

Insults might bother me sometimes but it is more bothersome to see people mislead. I don’t believe I am the one misleading in terms of how bank deposits and loans work.

47 Sonny on 05.03.18 at 9:08 am
I apologize in advance if this is a silly question. If Garth or anyone can answer, it would be appreciated.

Why did the banks choose to raise fixed rates this week?

Was there a particular event that triggered it? Is there a specific bond, whose yield spiked that caused this?

Cost of funds increased. – Garth

************************************
For example TD’s high interest savings account available to investors in TD Direct broker accounts now pays 1.1% and I believe a couple years ago it was more like 0.5%.

Banks sell a lot of their 5 year mortgages to fixed income investors through securitisation. This involves CMHC. I forget the exact names of these mortgage-backed securities. They pay a rate that is driven by the yield on the government of Canada five year bond. As Garth has pointed out many times that rate has increased in the market.

These investors are funding mortgage loans. Again these are people who owed money. These investors would consider those securities to be part of there savings.

The basic rule remains, one man’s debt is another man’s (or some corporation’s) savings.

Yes, banks have a cost of funding even though when a loan is first created it is created from thin air as explained.

1. I am a Chartered Financial Analyst, a Certified Management Accountant and have an MBA degree.

Not even a CFA? Shame. These credentials mean nothing. I know entry level accountants with these.
I won’t even interview you for a junior financial adviser job at a bank branch in a Canadian bank for 50 k annually.

And I have been reading the financials statements of several banks each year going back over 15 years. I have been doing financial analysis and writing about banks for over fifteen years.

And yet you lost your time.

You of course have no clue that a lot of the mortgages originated by Canadian banks are backed by MBS – mortgage backed securities that are tradeable securities on both domestic and international markets and have nothing to do with Canadian savers/depositors.

——————–

My advice:
1. go analyze the difference in credit issued and deposits and come and explain to me who holds the difference of trillions of dollars (at individual, corporate, government level).

You will be surprised that a lot of it is not deposits but tradable securities!

The difference?

I will explain it in Leman’s terms to you:

That valuation of tradable securities is derived not from deposits/past labour but from expected cash income in the future – from future labour.

Deposits are past labour/savings.
Securities are DERIVATIVES of deposits.

BTW it seems US rates would increase rather dramatically as no buyers emerge for US debt even around 3 % for 10 years Treasuries.

The talks (short of QE which will drive gold to 3 k instantly and oil to 200) are of 4 – 4.5 % in a year!

Now that will explain what is burning Poloz’s (the little boy with the finger in the hole in the dyke) behind lately as Canadian mortgages are (highly) correlated with US mid-long term treasuries and the Fed/BoC only influences the short term borrowing.

James on 05.03.18 at 12:30 pm
#156 Gravy Train on 05.03.18 at 11:28 am

#151 Smoking Man on 05.03.18 at 9:40 am
“Sometimes you just got to read between lines.”

Did you read the article, Smokey? Trump is a space cadet! :)
……………………………………………………………….
Reading is neither Donald J Trump nor Smoking Mans strong point.
…..
Space cadet? Haha. I’m more of a commander of star fleet Nictonite.
Btw. Kanye West is Awesome just discovered his music.
A newly red pilled super hero.
………………………………………………………………..
I’m sorry Commander of Star Fleet Nictonite. I stand corrected.
As for Kanye uh ha music, nope you have no taste in good music either. Earth to Smoky have a good flight!

The United Arab Emirates and people advocating for the interests of the UAE — including Prince, Nader, and Trump fundraiser Elliot Broidy who has done large business deals with the UAE — have started to appear frequently in news related to Mueller’s investigation. Erik Prince, the brother of the U.S. Secretary of Education Betsy DeVos, lived in the UAE, attended the Seychelles meeting with the UAE’s Crown Prince Mohammed bin Zayed Al-Nahyan, is business partners with Chun Shun Ko who just joined the board of the new Cambridge Analytica/SCL company Emerdata, and SCL had a large contract to work on behalf of the UAE.”…..

This was not written by Donald J Trump I can guarantee it. No wonder he was praying today. The end is near.

Donald J. Trump
‏Verified account @realDonaldTrump
3h3 hours ago

Today, it was my great honor to celebrate the #NationalDayOfPrayer at the @WhiteHouse, in the Rose Garden! Proclamation: http://45.wh.gov/U33k7z
0:13
National Day Of Prayer Service
5,802 replies 6,356 retweets 25,163 likes
Donald J. Trump
‏Verified account @realDonaldTrump
8h8 hours ago

…despite already having signed a detailed letter admitting that there was no affair. Prior to its violation by Ms. Clifford and her attorney, this was a private agreement. Money from the campaign, or campaign contributions, played no roll in this transaction.
36,639 replies 12,397 retweets 54,184 likes
Donald J. Trump
‏Verified account @realDonaldTrump
8h8 hours ago

…very common among celebrities and people of wealth. In this case it is in full force and effect and will be used in Arbitration for damages against Ms. Clifford (Daniels). The agreement was used to stop the false and extortionist accusations made by her about an affair,……
15,268 replies 11,891 retweets 50,418 likes
Donald J. Trump
‏Verified account @realDonaldTrump
8h8 hours ago

Mr. Cohen, an attorney, received a monthly retainer, not from the campaign and having nothing to do with the campaign, from which he entered into, through reimbursement, a private contract between two parties, known as a non-disclosure agreement, or NDA. These agreements are…..
15,722 replies 11,156 retweets 46,028 likes

#167 TheDood on 05.03.18 at 12:38 pm
Now that cheap credit is going going – soon to be gone, the general populace is house poor, neck deep in debt, with interest piling up, with lousy job prospects etc etc etc…. I think you’re pretty close to hitting the nail on the head. The toilet has been flushed, BC RE is starting to swirl, the BC economy is going to take a big hit. I think a 70% correction is probably a good bet.

Go back a little further out here. It was (much) higher interest rates that dropped the market like a rock in a dry well in the early eighties. Best vulchtime ever. But there will be a lot more bleeding out here if it happens again now. For one simply because there are so many more here now.

The ‘lending’ bank records a new ‘customer deposit’ and informs the ‘borrower’ that funds have been ‘deposited’ in the borrower’s account. Since neither the borrower nor the bank actually made a deposit at the bank — nor, in connection with this transaction, anyone else for that matter, it remains necessary to analyse the legal aspects of bank operations.

………………….

In this paper it was found that banks combine what are effectively very different operations, namely deposit-taking and granting of loans under one roof, because in this way they can invent new money in the form of fictitious ‘customer deposits’ when purporting to engage in the act of ‘lending’.

rudy’s announcement plan B
Will Donald Trump let the Federal Election Commission rot?
Without new blood, campaign finance watchdog could face shutdown
By Dave Levinthal 12:47 pm, September 8, 2017 Updated: 12:23 pm, September 18, 2017
Trump’s lack of interest is even more striking given that his White House counsel, Don McGahn, is a campaign finance and elections lawyer previously best known for waging war on campaign finance restrictions as an FEC commissioner.https://www.publicintegrity.org/news/Federal-Election-Commission

Response for #147 sonny:
keep your eye on the bond market and in particular the us treasury 10 year note,these 2 will give you a good indication of where mortgage rates are heading,regardless of what the BOC and “pussy Poloz” does or not. indications are upward in a long term sustained fashion.

DIMITRI LASCARIS: Our Canadian audience will be particularly interested to know, I would think, that the Poison Papers suggested the Canadian counterpart of the EPA, the Health Protection Branch, colluded with pesticide manufacturers to keep invalidly registered products on the market, and covered up problems with many of the safety tests performed on these products. Could you talk to us about what the Poison Papers reveal about the collusion of the Health Protection Branch in Canada?

DIMITRI LASCARIS: Our Canadian audience will be particularly interested to know, I would think, that the Poison Papers suggested the Canadian counterpart of the EPA, the Health Protection Branch, colluded with pesticide manufacturers to keep invalidly registered products on the market, and covered up problems with many of the safety tests performed on these products. Could you talk to us about what the Poison Papers reveal about the collusion of the Health Protection Branch in Canada?

Ottawa hot RE market: insanity is moving north. Ottawa is great place to be for RE scam due to secure government workers who can afford paying millions without fear of losing jobs/benefits.
RE will probably slow down in Vancouver/Toronto but it will spread to other places.
It should have been killed while small, now it is too big and powerful.

Certainly not the best gains that were available over the same interval, but your link does not refer to gold prices, and hence, does not refer to the returns a hypothetical goldbug holding gold from 2008 to present would have experienced.

The fact that enthusiasm for gold is probably at significant medium term lows is also a very bullish sign.

Stan Brooks et al, seems like there’s some confusion between the systemic effects of leveraged finance, and the ability of each participant to ‘create money’, which is more accurately, ‘create credit’. For every debtor/creditor relationship, each of the two parties to such is equally responsible for the creation of the debt obligation. A bank depositor is actually making a loan to a bank, and hence, is just as responsible for creating credit as the bank which acts as a borrower. A commercial bank (ie: Canada’s big 5, or the credit unions) are constrained in their activity of banking by the amount that they can borrow from all possible sources, and hence, must compete in the market for those funds.

Also, no reason to treat “Shawn Allen” with disrespect. The credentials of which he speaks (and additional ones I understand he holds) are not handed out like candy but require genuine analytical skill and expertise at a very high level. If you disagree with him, you had better have a pretty good argument in your mind as to why you believe he is wrong. And if you express such in a public forum, be prepared to offer up intelligent debate. Otherwise your integrity and your ability to purposefully participate in debate is seriously callable into question.

There may be hope for Comrade Horgan yet: basedon the quotes from former BC-NDP premier Mike Harcourt in this article, Socialist BC-NDP politicians (eventually) come to realize that targeting the homes of the wealthy is a dumb idea:

From the article:VICTORIA — The last time a B.C. NDP government brought in a tax surcharge on high-value homes, the move was both ideologically driven and wrong-headed.

“We let our doctrinal beliefs about ‘the wealthy must pay’ blind us to reality,” wrote then-Premier Mike Harcourt in a memoir published after he left office. “The basic premise of why we were doing this had more to do with left-wing bias than shrewd political thinking.”

The Harcourt government announced the surcharge on the school portion of property taxes on budget day in 1993, then abandoned it a week later in the face of a brewing tax revolt on the west side of Vancouver.

“We deserved to be the target of a tax revolt,” wrote Harcourt with the benefit of hindsight. “A significant number of those ‘rich folk’ turned out to be people on fixed incomes, many of them seniors who had bought their properties decades ago and were now seemingly being penalized for the market values their homes might attract.”

Harcourt knew whereof he spoke in terms of ideological rationales. The surcharge was one of a number of tax increases recommended by a senior adviser to then-Finance Minister Glen Clark in a policy paper that was subsequently leaked to The Vancouver Sun.

The paper urged the New Democrats to use taxes to promote “redistribution of wealth” on lines of “class, gender, race and disability” and to redress the balance between “those who can afford to invest in property and make gains and those who cannot.”

Stan Brooks et al, seems like there’s some confusion between the systemic effects of leveraged finance, and the ability of each participant to ‘create money’, which is more accurately, ‘create credit’. For every debtor/creditor relationship, each of the two parties to such is equally responsible for the creation of the debt obligation. A bank depositor is actually making a loan to a bank, and hence, is just as responsible for creating credit as the bank which acts as a borrower. A commercial bank (ie: Canada’s big 5, or the credit unions) are constrained in their activity of banking by the amount that they can borrow from all possible sources, and hence, must compete in the market for those funds.

Also, no reason to treat “Shawn Allen” with disrespect. The credentials of which he speaks (and additional ones I understand he holds) are not handed out like candy but require genuine analytical skill and expertise at a very high level. If you disagree with him, you had better have a pretty good argument in your mind as to why you believe he is wrong. And if you express such in a public forum, be prepared to offer up intelligent debate. Otherwise your integrity and your ability to purposefully participate in debate is seriously callable into question.

================================

I have deepest respect for Shawn Allen as a genuine person.

But I think he should use his brain to think independently. He is definitely capable to do it.

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The views expressed are those of the author, Garth Turner, a Raymond James Financial Advisor, and not necessarily those of Raymond James Ltd. It is provided as a general source of information only and should not be considered to be personal investment advice or a solicitation to buy or sell securities. Investors considering any investment should consult with their Investment Advisor to ensure that it is suitable for the investor's circumstances and risk tolerance before making any investment decision. The information contained in this blog was obtained from sources believed to be reliable, however, we cannot represent that it is accurate or complete. Raymond James Ltd. is a member of the Canadian Investor Protection Fund.